Iran, Income Inequality, and Inflation – the three “I”s impact

Bridgewater Co-CIO Greg Jensen believes that gold prices could hit $2,000 or more. Jensen told the Financial Times this week that geopolitical uncertainty and inflationary policies could press gold at least 30% higher. In the conversation, Jensen cited ongoing tensions between the U.S and Iran. He also mentioned concerns about income inequality in the United States.

That latter factor mirrors previous statements by Bridgewater founder Ray Dalio on the state of the global economy. Dalio predicted a “global sag” was coming to the markets.

“In paradigm shifts, most people get caught overextended doing something overly popular and get really hurt,” Dalio wrote July. “On the other hand, if you’re astute enough to understand these shifts, you can navigate them well or at least protect yourself against them.”

Bridgewater Co-CIO on Gold Prices in 2020

Bridgewater Co-CIO Jensen said he expects that the Federal Reserve and other central banks will let inflation run this year. He noted that gold provides a hedge against inflationary pressures caused around the globe. JPMorgan Chase data shows that 49 central banks cut rates 71 times in 2019, and more could come if weakness continues to emerge.

But the bigger factors centered around geopolitics for Jensen.

“There is so much boiling conflict,” Jensen told FT. “People should be prepared for a much wider range of potentially more volatile set of circumstances than we are mostly accustomed to.”

Related: Ray Dalio Thinks the World is Going Mad